Earned Value Management Quotes

There are only two ways to influence human behavior: you can manipulate it or you can inspire it. Very few people or companies can clearly articulate WHY they do WHAT they do. By WHY I mean your purpose, cause or belief - WHY does your company exist? WHY do you get out of bed every morning? And WHY should anyone care? People don’t buy WHAT you do, they buy WHY you do it. We are drawn to leaders and organizations that are good at communicating what they believe. Their ability to make us feel like we belong, to make us feel special, safe and not alone is part of what gives them the ability to inspire us. For values or guiding principles to be truly effective they have to be verbs. It’s not “integrity,” it’s “always do the right thing.” It’s not “innovation,” it’s “look at the problem from a different angle.” Articulating our values as verbs gives us a clear idea - we have a clear idea of how to act in any situation. Happy employees ensure happy customers. And happy customers ensure happy shareholders—in that order. Leading is not the same as being the leader. Being the leader means you hold the highest rank, either by earning it, good fortune or navigating internal politics. Leading, however, means that others willingly follow you—not because they have to, not because they are paid to, but because they want to. You don’t hire for skills, you hire for attitude. You can always teach skills. Great companies don’t hire skilled people and motivate them, they hire already motivated people and inspire them. People are either motivated or they are not. Unless you give motivated people something to believe in, something bigger than their job to work toward, they will motivate themselves to find a new job and you’ll be stuck with whoever’s left. Trust is maintained when values and beliefs are actively managed. If companies do not actively work to keep clarity, discipline and consistency in balance, then trust starts to break down. All organizations start with WHY, but only the great ones keep their WHY clear year after year.

Once the target market is identified, it’s really about putting the business in a position to provide superior value in the most efficient way to that target market thereby enabling the business to earn maximum profit in the exchange.

Time is not money. Time is the space where money is earned and measured. Wealth minded people aim to maximize how much value they create and minimize the time it takes to create that value.

Just for Today . . . Just for today . . . I will choose and display the right attitudes. Just for today . . . I will determine and act on important priorities. Just for today . . . I will know and follow healthy guidelines. Just for today . . . I will communicate with and care for my family. Just for today . . . I will practice and develop good thinking. Just for today . . . I will make and keep proper commitments. Just for today . . . I will earn and properly manage finances. Just for today . . . I will deepen and live out my faith. Just for today . . . I will initiate and invest in solid relationships. Just for today . . . I will plan for and model generosity. Just for today . . . I will embrace and practice good values. Just for today . . . I will seek and experience improvements.     Just for today . . . I will act on these decisions and practice these disciplines, and Then one day . . . I will see the compounding results of a day lived well.

I will choose and display the right attitudes. I will determine and act upon important priorities. I will know and follow healthy guidelines. I will communicate with and care for my family. I will practice and develop good thinking. I will make and keep proper commitments. I will earn and properly manage finances. I will deepen and live out my faith. I will accept and show responsibility. I will initiate and invest in solid relationships. I will plan for and model generosity. I will embrace and practice good values. I will seek and experience improvements.

A more recent concern relates to “financialization” and associated short-termism. Financialization is the growing importance of norms, metrics, and incentives from the financial sector to the wider economy. Some of the concerns expressed are that, for example, managers are increasingly awarded stock options to align their incentives with those of shareholders; companies are often explicitly managed to increase short-term shareholder value; and financial engineering, such as share buybacks and earnings management, has become a more important part of senior managers’ jobs. The end result is that rather than finance serving business, business serves finance: the tail wags the dog. What John Kay described as “obliquity,” the idea that making money was a consequence of, or a second-order benefit of, serving one’s customers and building good businesses, is driven out (Kay 2010).

An economic franchise arises from a product or service that: (1) is needed or desired; (2) is thought by its customers to have no close substitute and; (3) is not subject to price regulation. The existence of all three conditions will be demonstrated by a company’s ability to regularly price its product or service aggressively and thereby to earn high rates of return on capital. Moreover, franchises can tolerate mismanagement. Inept managers may diminish a franchise’s profitability, but they cannot inflict mortal damage.

Likewise, we “trusted the process,” but the process didn’t save Toy Story 2 either. “Trust the Process” had morphed into “Assume that the Process Will Fix Things for Us.” It gave us solace, which we felt we needed. But it also coaxed us into letting down our guard and, in the end, made us passive. Even worse, it made us sloppy. Once this became clear to me, I began telling people that the phrase was meaningless. I told our staff that it had become a crutch that was distracting us from engaging, in a meaningful way, with our problems. We should trust in people, I told them, not processes. The error we’d made was forgetting that “the process” has no agenda and doesn’t have taste. It is just a tool—a framework. We needed to take more responsibility and ownership of our own work, our need for self-discipline, and our goals. Imagine an old, heavy suitcase whose well-worn handles are hanging by a few threads. The handle is “Trust the Process” or “Story Is King”—a pithy statement that seems, on the face of it, to stand for so much more. The suitcase represents all that has gone into the formation of the phrase: the experience, the deep wisdom, the truths that emerge from struggle. Too often, we grab the handle and—without realizing it—walk off without the suitcase. What’s more, we don’t even think about what we’ve left behind. After all, the handle is so much easier to carry around than the suitcase. Once you’re aware of the suitcase/handle problem, you’ll see it everywhere. People glom onto words and stories that are often just stand-ins for real action and meaning. Advertisers look for words that imply a product’s value and use that as a substitute for value itself. Companies constantly tell us about their commitment to excellence, implying that this means they will make only top-shelf products. Words like quality and excellence are misapplied so relentlessly that they border on meaningless. Managers scour books and magazines looking for greater understanding but settle instead for adopting a new terminology, thinking that using fresh words will bring them closer to their goals. When someone comes up with a phrase that sticks, it becomes a meme, which migrates around even as it disconnects from its original meaning. To ensure quality, then, excellence must be an earned word, attributed by others to us, not proclaimed by us about ourselves. It is the responsibility of good leaders to make sure that words remain attached to the meanings and ideals they represent.

The ‘Regal Seven (key) Ingredients of a Successful Company’ is: Pursue the goal of Profit Maximization keeping in mind the shareholders interests. To be achieved by developing and rendering Quality Goods and Services at a Reasonable Price. By inculcating Value and Ethics within the structure Through Sound People Management principles devised and effectively implemented. Further organizing Learning Programs and instill concept of ‘Learning and Earning’ Develop/Construct Customer Satisfaction. Build-Build-Build ; Build vision based values, Build your staff, Build customer satisfaction ; and witness your organization being built in the market.

That’s why one of my strongest ideas is to look at the tax code in both its complexity and its obvious bias toward the rich. Hedge fund and money managers are important for our pension funds and the 401(k) plans that help millions of Americans—but far less important than they think. But financial advisers should pay taxes at the highest levels when they’re earning money at those levels. Often, these financial engineers are “flipping” companies, laying people off, and making billions—yes, billions—of dollars by “downsizing” and destroying people’s lives and sometimes entire companies. Believe me, I know the value of a billion dollars—but I also know the importance of a single dollar.

My confusion about the separation between the servant class and the upper middle class revealed a quintessentially American point of view. Status is much more fluid in America, at least within the wide range of the population that can loosely be characterized as middle-class. I wait tables at a restaurant, and after my shift is over, I go out to a lounge and someone waits on me. Even if I get a graduate degree and earn a six-figure salary, I don’t treat waiters like a permanently lower class. After all, I was one and know what it feels like. And who knows when someone serving me in this restaurant will get their own graduate degree and be my boss. Better to be friendly. My “American-ness” was starting to stare me in the face in India: not the America of big-screen televisions and Hummers, but the America that, despite its constant failings, managed to inculcate in its citizens a set of humanizing values—the dignity of labor, the fundamental equality of human beings, mobility based on drive and talent, the opportunity to create and contribute.

Shareholders have a residual claim on a firm’s assets and earnings, meaning they get what’s left after all other claimants—employees and their pension funds, suppliers, tax-collecting governments, debt holders, and preferred shareholders (if any exist)—are paid. The value of their shares, therefore, is the discounted value of all future cash flows minus those payments. Since the future is unknowable, potential shareholders must estimate what that cash flow will be; their collective expectations about the future determine the stock price. Any shareholders who expect that the discounted value of future equity earnings of the company will be less than the current price will sell their stock. Any potential shareholders who expect that the discounted future value will exceed the current price will buy stock. This means that shareholder value has almost nothing to do with the present. Indeed, present earnings tend to be a small fraction of the value of common shares. Over the past decade, the average yearly price-earnings multiple for the S&P 500 has been 22x, meaning that current earnings represent less than 5 percent of stock prices.

Here are four more strategies to help you stack the deck in your favor when seeking a raise or a promotion: ✓ DO YOUR RESEARCH: Understand your market value and, more important, your value to the company. Be prepared to explain, candidly and concretely, what you feel you’re doing that you’re not being compensated for. Have confidence in your own worth. ✓ ASK TO BE PAID FOR THE JOB YOU’RE ACTUALLY DOING: If your responsibilities have increased but you haven’t been recognized since, say, you’ve taken over for the manager who left several months earlier, approach your new boss and say, “I’ve been effectively doing this person’s job since she departed and I’d like to formally assume her position.” Have a conversation. Express that you feel confident you can grow in this role and create value for the organization. ✓ PROVE YOUR WORTH: To earn an increase in salary, you need to be increasing your responsibilities and performing at a higher level than when you were hired. ✓ DON’T NEGOTIATE IF YOUR BOSS SAYS NO: Typically no means no when it comes to this type of discussion. If your boss says no, you have two choices: you either accept the rationale, think about it, and grow based on the feedback, or you leave. This is a good time to be reflective. Ask why you haven’t earned the increase. You may not walk away with a new title or more money, but hopefully you’ll learn something that will help you correct your course moving forward.

Like spacecraft that pick up speed as they rise into the Earth’s stratosphere, growth stocks often seem to defy gravity. Let’s look at the trajectories of three of the hottest growth stocks of the 1990s: General Electric, Home Depot, and Sun Microsystems. (See Figure 7-1.) In every year from 1995 through 1999, each grew bigger and more profitable. Revenues doubled at Sun and more than doubled at Home Depot. According to Value Line, GE’s revenues grew 29%; its earnings rose 65%. At Home Depot and Sun, earnings per share roughly tripled. But something else was happening—and it wouldn’t have surprised Graham one bit. The faster these companies grew, the more expensive their stocks became. And when stocks grow faster than companies, investors always end up sorry. As Figure 7-2 shows: A great company is not a great investment if you pay too much for the stock. The more a stock has gone up, the more it seems likely to keep going up. But that instinctive belief is flatly contradicted by a fundamental law of financial physics: The bigger they get, the slower they grow. A $1-billion company can double its sales fairly easily; but where can a $50-billion company turn to find another $50 billion in business? Growth stocks are worth buying when their prices are reasonable, but when their price/earnings ratios go much above 25 or 30 the odds get ugly: Journalist Carol Loomis found that, from 1960 through 1999, only eight of the largest 150 companies on the Fortune 500 list managed to raise their earnings by an annual average of at least 15% for two decades.

Convinced that struggle was the crucible of character, Rockefeller faced a delicate task in raising his children. He wanted to accumulate wealth while inculcating in them the values of his threadbare boyhood. The first step in saving them from extravagance was keeping them ignorant of their father’s affluence. Until they were adults, Rockefeller’s children never visited his office or refineries, and even then they were accompanied by company officials, never Father. At home, Rockefeller created a make-believe market economy, calling Cettie the “general manager” and requiring the children to keep careful account books.16They earned pocket money by performing chores and received two cents for killing flies, ten cents for sharpening pencils, five cents per hour for practicing their musical instruments, and a dollar for repairing vases. They were given two cents per day for abstaining from candy and a dime bonus for each consecutive day of abstinence. Each toiled in a separate patch of the vegetable garden, earning a penny for every ten weeds they pulled up. John Jr. got fifteen cents an hour for chopping wood and ten cents per day for superintending paths. Rockefeller took pride in training his children as miniature household workers. Years later, riding on a train with his thirteen-year-old daughter, he told a traveling companion, “This little girl is earning money already. You never could imagine how she does it. I have learned what my gas bills should average when the gas is managed with care, and I have told her that she can have for pin money all that she will save every month on this amount, so she goes around every night and keeps the gas turned down where it is not needed.”17 Rockefeller never tired of preaching economy and whenever a package arrived at home, he made a point of saving the paper and string. Cettie was equally vigilant. When the children clamored for bicycles, John suggested buying one for each child. “No,” said Cettie, “we will buy just one for all of them.” “But, my dear,” John protested, “tricycles do not cost much.” “That is true,” she replied. “It is not the cost. But if they have just one they will learn to give up to one another.”18 So the children shared a single bicycle. Amazingly enough, the four children probably grew up with a level of creature comforts not that far above what Rockefeller had known as a boy.

I raised two daughters,” Ronica pointed out gently. “I know how painful victory can be sometimes.” “Not over me,” Keffria said dully. There was self-loathing in her tone as she added, “I don’t think I ever gave you and Father a sleepless night. I was a model child, never challenging anything you told me, keeping all the rules, and earning the rewards of such virtue. Or so I thought.” “You were my easy daughter,” Ronica conceded. “Perhaps because of that, I under-valued you. Over-looked you.” She shook her head to herself. “But in those days, Althea worried me so that I seldom had a moment to think of what was going right…” Keffria exhaled sharply. “And you didn’t know the half of what she was doing! As her sister, I… but in all the years, it hasn’t changed. She still worries us, both of us. When she was a little girl, her willfulness and naughtiness always made her Papa’s favorite. And now that he has gone, she has disappeared, and so managed to capture your heart as well, simply by being absent.” “Keffria!” Ronica rebuked her for the heartless words. Her sister was missing, and all she could be was jealous of Ronica worrying about her? But after a moment, Ronica asked hesitantly, “You truly feel that I give no thoughts to you, simply because Althea is gone?” “You scarcely speak to me,” Keffria pointed out. “When I muddled the ledger books for what I had inherited, you simply took them back from me and did them yourself. You run the household as if I was not there. When Cerwin showed up on the doorstep today, you charged directly into battle, only sending Rache to tell me about it as an afterthought. Mother, were I to disappear as Althea has, I think the household would only run more smoothly. You are so capable of managing it all.” She paused and her voice was almost choked as she added, “You leave no room for me to matter.” She hastily lifted her mug and took a long sip of coffee. She stared deep into the fireplace. Ronica found herself wordless. She drank from her own mug. She knew she was making excuses when she said, “But I was always just waiting for you to take things over from me.” “And always so busy holding the reins that you had no time to teach me how. ‘Here, give me that, it’s easier if I just do it myself.’ How many times have you said that to me? Do you know how stupid and helpless it always made me feel?” The anger in her voice was very old.

Developing a business depends on many factors. But you should basically understand the exchange between value. In other words, you must provide value to receive equal value. If you look at single people, you can see that they can’t provide any value – they don’t smile, dress, talk or behave in a way that makes others want to spend time, much less a life, with them. Relationships and Business are not much different. In a business, people know that appearance and the way you talk to a costumer is as important as the value of your product, and that’s why brands sell, even when their products have no quality. For example, in shopping malls you can see shops packed with people buying clothes that have no value and will be ruined or out of fashion very soon, because the brand is selling an image, not quality anymore. China, on the other hand, managed to compete in the world markets by reducing price over quality, and is now paying the price of a very bad reputation, as most people don’t trust Chinese brands anymore. This is already impacting the economy, so I don’t know what will happen in the next years. It’s all in the hands of the politicians and the internationalization of the companies. And yet, I just said this to explain the relation between value and product. But here’s another example. I tried to share what I know about Learning with Teachers, Parents and Psychologists, and nobody cared. Besides, what I earned in helping children with learning disabilities was a very low payment, and I had to quit that as I couldn’t afford to pay an apartment and daily expenses with such job. However, there are people making thousands of dollars with drugs that have no effect, toilets for cats and pet-rocks. In other words, is never about what the world needs but what the world wants.

Developing a business depends on many factors. But you should basically understand the exchange between value. In other words, you must provide value to receive equal value. If you look at most singles, you can see that they can’t provide any value – they often don’t smile, dress, talk or behave in a way that makes others want to spend time, much less a lifetime, with them. Relationships and businesses are not much different. In a business, people know that appearance and the way you talk to a costumer is as important as the value of your product, and that’s why brands sell, even when their products have no quality. For example, in shopping malls you can see shops packed with people buying clothes that have no value and will be ruined or out of fashion very soon, because the brand is selling an image, not quality anymore. China, on the other hand, managed to compete in the world market by reducing price over quality, and is now paying the cost of a very bad reputation, as most people don’t trust Chinese brands anymore. This is already impacting the economy, so I don’t know what will happen in the next years. It is all in the hands of the politicians and the internationalization of the companies. And yet, I just said this to explain the relation between value and product. But here’s another example: I tried to share what I know about learning with teachers, parents and psychologists, and nobody cared. Besides, what I earned in helping children with learning disabilities was a very low payment, and I had to quit that as I couldn’t afford to pay an apartment and daily expenses with such job. However, there are people making thousands of dollars with drugs that have no effect, toilets for cats and pet-rocks. In other words, it is never about what the world needs but what the world wants.

With a zero risk profile, no one dares to take responsibility. Mistakes are hidden like dust is swept under the carpet and when they come to light, innocent people who had nothing to do with the mistakes are let go, while the responsible people stay in their positions. Company leaders understand the zero risk profile and rule with authority. People not wanting to risk their income, do unpaid overtime. Though this is illegal, the lack of “Western” ethics does neither shock nor surprise any of the employees. People complaining are creatively fired. Most employees keep their mouths shut and know other companies apply the exact same methods. It merely is business as usual. This demotivates the masses and – consequently - service levels become progressively worse. With the strong company hierarchies and the many levels of middle management, information from the lowest levels in the company hardly reaches general management and vice versa. Underutilized resources, like the employees, generate - relatively seen – little added value. Salaries are in line with these values and people just accept it. Regardless of their age or background, they know their friends and family members earn a similar low salary elsewhere. It is what it is, right?

Passage Five: From Business Manager to Group Manager This is another leadership passage that at first glance doesn’t seem overly arduous. The assumption is that if you can run one business successfully, you can do the same with two or more businesses. The flaw in this reasoning begins with what is valued at each leadership level. A business manager values the success of his own business. A group manager values the success of other people’s businesses. This is a critical distinction because some people only derive satisfaction when they’re the ones receiving the lion’s share of the credit. As you might imagine, a group manager who doesn’t value the success of others will fail to inspire and support the performance of the business managers who report to him. Or his actions might be dictated by his frustration; he’s convinced he could operate the various businesses better than any of his managers and wishes he could be doing so. In either instance, the leadership pipeline becomes clogged with business managers who aren’t operating at peak capacity because they’re not being properly supported or their authority is being usurped. This level also requires a critical shift in four skill sets. First, group managers must become proficient at evaluating strategy for capital allocation and deployment purposes. This is a sophisticated business skill that involves learning to ask the right questions, analyze the right data, and apply the right corporate perspective to understand which strategy has the greatest probability of success and therefore should be funded. The second skill cluster involves development of business managers. As part of this development, group managers need to know which of the function managers are ready to become business managers. Coaching new business managers is also an important role for this level. The third skill set has to do with portfolio strategy. This is quite different from business strategy and demands a perceptual shift. This is the first time managers have to ask these questions: Do I have the right collection of businesses? What businesses should be added, subtracted, or changed to position us properly and ensure current and future earnings? Fourth, group managers must become astute about assessing whether they have the right core capabilities. This means avoiding wishful thinking and instead taking a hard, objective look at their range of resources and making a judgment based on analysis and experience. Leadership becomes more holistic at this level. People may master the required skills, but they won’t perform at full leadership capacity if they don’t begin to see themselves as broad-gauged executives. By broad-gauged, we mean that managers need to factor in the complexities of running multiple businesses, thinking in terms of community, industry, government,

Developing a business depends on many factors. But you should basically understand the exchange between value. In other words, you must provide value to receive equal value. If you look at single people, you can see that they can’t provide any value – they don’t smile, dress, talk or behave in a way that makes others want to spend time, much less a life, with them. Relationships and Business are not much different. In a business, people know that appearance and the way you talk to a costumer is as important as the value of your product, and that’s why brands sell, even when their products have no quality. For example, in shopping malls you can see shops packed with people buying clothes that have no value and will be ruined or out of fashion very soon, because the brand is selling an image, not quality anymore. China, on the other hand, managed to compete in the world markets by reducing price over quality, and is now paying the price of a very bad reputation, as most people don’t trust Chinese brands anymore. This is already impacting the economy, so I don’t know what will happen in the next years. It’s all in the hands of the politicians and the internationalization of the companies. Actually, that’s why this Chinese government sends its companies to other countries. And yet, I just said this to explain the relation between value and product. But here’s another. I tried to share what I know about Learning with Teachers, Parents and Psychologists, and nobody cared. Besides, what I earned in helping children with learning disabilities was a very low payment, and I had to quit that as I couldn’t afford to pay an apartment and daily expenses with such job. However, there are people making thousands of dollars with drugs that have no effect, toilets for cats and pet-rocks. In other words, is never about what the world needs but what the world wants.

The second possibility is of a quite different sort. Perhaps many of the security analysts are handicapped by a flaw in their basic approach to the problem of stock selection. They seek the industries with the best prospects of growth, and the companies in these industries with the best management and other advantages. The implication is that they will buy into such industries and such companies at any price, however high, and they will avoid less promising industries and companies no matter how low the price of their shares. This would be the only correct procedure if the earnings of the good companies were sure to grow at a rapid rate indefinitely in the future, for then in theory their value would be infinite. And if the less promising companies were headed for extinction, with no salvage, the analysts would be right to consider them unattractive at any price. The

The second possibility is of a quite different sort. Perhaps many of the security analysts are handicapped by a flaw in their basic approach to the problem of stock selection. They seek the industries with the best prospects of growth, and the companies in these industries with the best management and other advantages. The implication is that they will buy into such industries and such companies at any price, however high, and they will avoid less promising industries and companies no matter how low the price of their shares. This would be the only correct procedure if the earnings of the good companies were sure to grow at a rapid rate indefinitely in the future, for then in theory their value would be infinite. And if the less promising companies were headed for extinction, with no salvage, the analysts would be right to consider them unattractive at any price. The truth about our corporate ventures is quite otherwise. Extremely few companies have been able to show a high rate of uninterrupted growth for long periods of time. Remarkably few, also, of the larger companies suffer ultimate extinction. For most, their history is one of vicissitudes, of ups and downs, of change in their relative standing. In some the variations “from rags to riches and back” have been repeated on almost a cyclical basis—the phrase used to be a standard one applied to the steel industry—for others spectacular changes have been identified with deterioration or improvement of management.

Companies often confuse the building to learn and building to earn.

PROLETARIAT. This is the term used by Karl Marx to refer to the working class, and it is defined as the class within capitalism that does not own the means of production, the class that owns nothing other than its labor power. The proletariat is locked in struggle with the bourgeoisie which owns and controls the means of production, and by extension controls the state. Gradually developing in size, organization, and class consciousness the proletariat, Marx believes, will bring about revolutionary change, overthrowing capitalism and instituting communism after a transitional phase of the dictatorship of the proletariat. With the advent of communism and the abolition of private property the proletariat along with all other classes will disappear. There are a number of significant problems with Marx’s notion of the proletariat. First, Marx nowhere develops a theory of class and fails to offer more than a terse definition of the proletariat. This means that it is very difficult to determine exactly who falls into the category of proletarian. For example, managers, professionals, intellectuals and housewives/husbands are all propertyless, but it is not clear if they should be included in the proletariat since they do not create value and in the case of managers and professionals in particular they may earn vastly more than and see themselves very differently from a more typical member of the proletariat such as a factory worker. Also, there is the problem of the lack of a revolutionary consciousness emerging in the proletariat, which has led to some Marxists, such as Vladimir Ilich Lenin, arguing for a vanguard party to import revolutionary consciousness into the proletariat, and others, for example the members of the Frankfurt School, taking a more pessimistic view of the possibility of the proletariat being an agent of revolution at all.

where a = accumulated future value, p = principal or present value, r = rate of return in percentage terms, and n = number of compounding periods. All too often, management teams focus on the r variable in this equation. They seek instant gratification, with high profit margins and high growth in reported earnings per share (EPS) in the near term, as opposed to initiatives that would lead to a much more valuable business many years down the line. This causes many management teams to pass on investments that would create long-term value but would cause “accounting numbers” to look bad in the short term. Pressure from analysts can inadvertently incentivize companies to make as much money as possible off their present customers to report good quarterly numbers, instead of offering a fair price that creates enduring goodwill and a long-term win–win relationship for all stakeholders. The businesses that buy commodities and sell brands and have strong pricing power (typically depicted by high gross margins) should always remember that possessing pricing power is like having access to a large amount of credit. You may have it in abundance, but you must use it sparingly. Having pricing power doesn’t mean you exercise it right away. Consumer surplus is a great strategy, especially for subscription-based business models in which management should primarily focus on habit formation and making renewals a no-brainer. Most businesses fail to appreciate this delicate trade-off between high short-term profitability and the longevity accorded to the business through disciplined pricing and offering great customer value. The few businesses that do understand this trade-off always display “pain today, gain tomorrow” thinking in their daily decisions.

While the case for long-term investment has tended to centre around simple mathematical advantages such as reduced (frictional) costs and fewer decisions leading (hopefully) to fewer mistakes, the real advantage to this approach, in our opinion, comes from asking more valuable questions. The short-term investor asks questions in the hope of gleaning clues to near-term outcomes: relating typically to operating margins, earnings per share and revenue trends over the next quarter, for example. Such information is relevant for the briefest period and only has value if it is correct, incremental, and overwhelms other pieces of information. Even when accurate, the value of the information is likely to be modest, say, a few percentage points in performance. In order to build a viable, economically important track record, the short-term investor may need to perform this trick many thousands of times in a career and/ or employ large amounts of financial leverage to exploit marginal opportunities. And let’s face it, the competition for such investment snippets is ferocious. This competition is fed by the investment banks. Wall Street relies heavily on promoting client myopia to earn its crust. Why

Ross’s “arbitrage pricing theory” and Rosenberg’s “bionic betas” posited that the returns of any financial security are the result of several systematic factors. Although seemingly stating the obvious, this was a seminal moment in the move toward a more vibrant understanding of markets. The eclectic Rosenberg was even put on the cover of Institutional Investor in May 1978, the bald, mustachioed man depicted as a giant meditating guru with flowers in his hair, worshipped by a gathering of besuited portfolio managers. The headline was “Who Is Barr Rosenberg? And What the Hell Is He Talking About?”8 What he was talking about was how academics were beginning to classify stocks according to not just their industry or their geography, but their financial characteristics. And some of these characteristics might actually prove to deliver better long-term returns than the broader stock market. In 1973, Sanjoy Basu, a finance professor at McMaster University in Ontario, published a paper that indicated that companies with low stock prices relative to their earnings did better than the efficient-markets hypothesis would suggest. Essentially, he showed that the value investing principles espoused by Benjamin Graham in the 1930s—which revolved around buying cheap, out-of-favor stocks trading below their intrinsic worth—was a durable investment factor. By systematically buying all cheap stocks, investors could in theory beat the broader market over time. Then Banz showed the same for small caps, another big moment in the evolution of factor investing. Follow-up studies on smaller stocks in Japan and the UK showed similar results, so in 1986 DFA launched dedicated small-cap funds for those two markets as well. In the early 1990s, finance professors Narasimhan Jegadeesh and Sheridan Titman published a paper indicating that simply surfing market momentum—in practice buying stocks that were already bouncing and selling those that were sliding—could also produce market-beating returns.9 The reasons for these apparent anomalies divide academics. Efficient-markets disciples stipulate that they are the compensation investors receive for taking extra risks. Value stocks, for example, are often found in beaten-up, unpopular, and shunned companies, such as boring industrial conglomerates in the middle of the dotcom bubble. While they can underperform for long stretches, eventually their underlying worth shines through and rewards investors who kept the faith. Small stocks do well largely because small companies are more likely to fail than bigger ones. Behavioral economists, on the other hand, argue that factors tend to be the product of our irrational human biases. For example, just like how we buy pricey lottery tickets for the infinitesimal chance of big wins, investors tend to overpay for fast-growing, glamorous stocks, and unfairly shun duller, steadier ones. Smaller stocks do well because we are illogically drawn to names we know well. The momentum factor, on the other hand, works because investors initially underreact to news but overreact in the long run, or often sell winners too quickly and hang on to bad bets for far longer than is advisable.

Perhaps many of the security analysts are handicapped by a flaw in their basic approach to the problem of stock selection. They seek the industries with the best prospects of growth, and the companies in these industries with the best management and other advantages. The implication is that they will buy into such industries and such companies at any price, however high, and they will avoid less promising industries and companies no matter how low the price of their shares. This would be the only correct procedure if the earnings of the good companies were sure to grow at a rapid rate indefinitely in the future, for then in theory their value would be infinite. And if the less promising companies were headed for extinction, with no salvage, the analysts would be right to consider them unattractive at any price.

Dear Lord, you are a vampire,” Eva gasped, then covered her mouth to keep the wayward thing from spouting any other unwanted revelations. Connall stiffened, his eyes shooting to her face. He had the oddest expression on his face, she noted. He looked . . . scared? Nay, apprehensive was a better description, and Eva had to wonder why he was looking so apprehensive when he was the soulless— Nay, not soulless, she reminded herself, recalling their conversation from the night before. He was not dead, nor soulless, he had assured her and he did not kill those he bit. Connall had described himself as just different and while Eva thought that was something of an understatement, she reassured herself with that information, now. He was just different, still her husband, the kind, sweet, gentle man who had treated her as if she had value, and shown her such consideration, as well as taught her passion. Nothing else had changed, she reminded herself as her head began to spin. He was the clan chief of the MacAdie, and her husband. And really, as flaws went, vampirism was much more pleasant to deal with than his being a wife beater or some such thing. Wasn’t it? “Dear Lord,” Eva breathed, shaking her head at her own thoughts, then she glanced to Connall again. He was uncharacteristically silent, his attention focused on her with an intensity that made her nervous. Her husband hadn’t said a word since she’d blurted that he was a vampire and it was making her uncomfortable enough to start searching her mind for a way to make him leave. “If you have things to do, you need not trouble yourself to wait here for me to finish eating. I can manage well enough on my own,” she murmured at last, though the food was all gone. “Tis no trouble to be with ye,” he said with a frown and there was sudden anger on his face. “Yer no a burden to me, Eva, ye ne’er ha’e been and ne’er will be. Dear God, ye saved me life this morn, woman, no once, but twice. Ha’e ye no realized yer worth yet?” “I—” Eva shook her head helplessly, confused by the tears suddenly pooling in her eyes. His vehemence was as surprising to her as the words themselves. She had saved his life that morning. She’d driven the intruder off with the log, then . . . well all right, the feeding bit wasn’t that impressive. Anyone would have done in that instance, but she had fended off the intruder. “Ye’ve courage and beauty and intelligence and are a worthy wife. E’en a king would ha’e pride in claimin’ ye to wife. I have felt nothing but pride in claimin’ ye meself.” “Despite my bein’ accident prone?” she teased with a wry twist of the lips. “Yer accidents are a result o’ tryin’ too hard to earn a place here,” he said quietly. “But ’tis only because you doonae realize ye already ha’e a place here. Yer the Lady MacAdie. My wife.” Eva swallowed, her gaze dropping from his at those words. They made her heart ache for some reason. “Why do ye look away? Do ye hate me now?” Eva glanced back up with surprise. “What?” “Now that ye know what I am?” he explained. “Will ye be wantin’ an annulment? Beggin’ to be set free? Wid ye rather a mortal man to husband? Should I take ye back to Caxton?” Eva stared at him in horror, fear clutching at her heart at the very idea of what he suggested.

The Four Global Options Now that you grasp the BIG picture, which includes your life values, your career values, your T-Bar, and current market conditions, it’s time to consider the four global options. I call these global options because, in reality, these are the only four job or career options you have. Option #1: Same job–same industry. Choosing Option #1 means you enjoy both and, most likely, need only conduct a job transition campaign to seek out a new company or organization. For example, a fifth grade teacher who is teaching in a public school may seek the same job (teacher) in the same industry (public school system); this teacher only needs to look at a new school in the same school district or to apply for a teacher’s position in a new school district. Option #2: New job–same industry. Option #2 means you enjoy the industry but need to identify a new job within that industry. Using the fifth grade teacher as an example again, she might seek a new job as an assistant principal or librarian. Or maybe she wants to earn more money than she would make as a teacher, so she becomes a sales professional and sells textbooks to educational institutions. The job transition campaign will take place within education, but she will identify and pursue a new, more inspiring, and more rewarding job within that industry. Option #3: Same job–new industry. If you select Option #3, it means you enjoy your job or vocation, but you need to identify a new industry or environment to perform that job in. The fifth grade teacher might get a job teaching for a private school (new industry or venue) or a private learning center, or she might even start her own tutoring business. In this case, the job transition campaign will focus on teaching but in a new, more appealing industry or venue. Option #4: New job–new industry. This option means you are ready for a wholesale change. Oftentimes this option is the option of choice if there’s a career or job you’ve always dreamt about. Or possibly you have a nice severance package or the financial means to return to school and prepare for an entirely new career. Possibly the fifth grade teacher always had a passion for antiques. In this case, she might pursue a job as a manager or even an owner of an antique store. Perhaps she’ll make the decision to stay home and be a full-time mom. The job transition campaign will focus on an entirely new job or activity in an entirely new industry or venue.

There are many things you can do to help your child direct and manage her own learning, but perhaps the most important one is choosing how and where to put your attention. Think hard about what you value most, because that’s what deserves your attention. Your child will respond by doing more of whatever earns your focus. You feed a behavior with your attention, and by feeding it, you create more of it — so be thoughtful about what you invest with that power. Contemplate your goals and intentions.

A CEO To increase global presence, product mix, and market share to improve and maintain shareholder earnings and value Mergers and acquisitions Reengineering and change management International corporate leadership experience Visionary strategist; identify and pursue new growth opportunities Board member and shareholder relations management Developer of world-class teams to achieve world-class results MBA from Oxford in international business Skilled in raising capital for growth and expansion

A survey of 348 male managers at twenty Fortune 500 companies found that fathers from dual-career families put in an average of two fewer hours per week – or about 4 percent less – than men whose wives were at home. That was the only difference between the two groups of men. But the fathers with working wives, who presumably had a few more domestic responsibilities, earned almost 20 percent less.

The structures and initial conditions that are required for successful growth are enumerated in the chapters of this book. They include starting with a cost structure in which attractive profits can be earned at low price points and which can then be carried up-market; being in a disruptive position relative to competitors so that they are motivated to flee rather than fight; starting with a set of customers who had been nonconsumers so that they are pleased with modest products; targeting a job that customers are trying to get done; skating to where the money will be, not to where it was; assigning managers who have taken the right courses in the school of experience and putting them to work within processes and organizational values that are attuned to what needs to be done; having the flexibility to respond as a viable strategy emerges; and starting with capital that can be patient for growth. If you start in conditions such as these, you do not need to see deeply into the future. Attractive choices that lead to success will present themselves. It is when you start in conditions that are opposite to these that attractive options may not appear, and the right choices will be difficult to make.

Investors can take advantage of this mispricing by buying low-cost passively managed portfolios of value stocks or fundamentally weighted indexes that weight each stock by its share of dividends or earnings rather than by its market value.

Investors still need to ask, how stable is the enterprise, and what are its future prospects? What are its earnings and cash flow? What is the downside risk of owning it? What is its liquidation value? How capable and honest is its management? What would you pay for the stock of this company if it were public? What factors might cause the owner of this business to sell control at a bargain price? Similarly, the pair never addressed how to analyze the purchase of an office building or apartment complex. Real estate bargains come about for the same reasons as securities bargains—an urgent need for cash, inability to perform proper analysis, a bearish macro view, or investor disfavor or neglect. In a bad real estate climate, tighter lending standards can cause even healthy properties to sell at distressed prices. Graham and Dodd’s principles—such as the stability of cash flow, sufficiency of return, and analysis of downside risk—allow us to identify real estate investments with a margin of safety in any market environment.

The first, or predictive, approach could also be called the qualitative approach, since it emphasizes prospects, management, and other nonmeasurable, albeit highly important, factors that go under the heading of quality. The second, or protective, approach may be called the quantitative or statistical approach, since it emphasizes the measurable relationships between selling price and earnings, assets, dividends, and so forth. Incidentally, the quantitative method is really an extension—into the field of common stocks—of the viewpoint that security analysis has found to be sound in the selection of bonds and preferred stocks for investment. In our own attitude and professional work we were always committed to the quantitative approach. From the first we wanted to make sure that we were getting ample value for our money in concrete, demonstrable terms. We were not willing to accept the prospects and promises of the future as compensation